The Schroder S&P Cautious Managed Distribution Portfolio, which opened last week, will take advantage of the Ucits III directive to allow it to invest in property, private equity and low-volatility hedge funds.“Ucits III is key to this fund as it enables us to buy private equity, which has a low correlation to the UK equity market,” says Neil Bridge, head of UK retail sales at Schroders. While not currently part of the portfolio, he says hedge funds may be added to the fund if the opportunity arises. The fund sits in the Cautious Managed sector and is managed by Andrew Yeadon, who also runs Schroders’ other fund of funds products. According to Bridge, “the demise of with-profits in Britain has caused a fundamental structural change for advisers. The Cautious Managed sector will benefit from this decline, as it is seen as an alternative to the with-profits sector.” The Cautious Managed Distribution Portfolio will complement Schroders’ other two multi-manager funds. These are the £38.9m Schroder S&P Strategic Balanced fund and the £3.5m Schroder S&P High Alpha fund, which were launched last September in conjunction with Standard & Poor’s. The fund currently has equity holdings across Britain, Japan, Europe and emerging markets. Yeadon has avoided adding American funds to the portfolio partly because of the market’s high correlation to the UK, says Bridge. At launch, the fund had 50% of its portfolio invested in equities, with its largest equity holding in the Merrill Lynch UK Dynamic fund, managed by Mark Lyttleton. The fund also invests 35% of a maximum 50% in UK fixed interest, with its largest holding in Bob Michele’s Schroder Strategic Bond fund. Bridge explains: “We are less keen than we could be on fixed interest. Our holdings in private equity and property have come at the expense of fixed interest to some extent.” Private equity and property each make up 5% of the fund’s portfolio. The fund carries an initial charge of 5.25% and an annual management fee of 1.25%. Commission for intermediaries is set at 3% and there is a 0.5% renewal option available.